The Importance of Learning for Achieving the UK's Targets for Offshore Wind

Abstract

Using a purpose-built, multi-sectoral energy-economy-environmental model we evaluate the economic and environmental impact of a reduction in the levelized costs of offshore wind energy generation in the UK. Our modelling approach suggests that in order to significantly increase the offshore wind capacity in the UK the required fall in the generation cost should be larger than expected and certainly bigger than that implied by the most recent cost projections developed by the UK Department of Energy and Climate Change (DECC). Potential expansion of the offshore wind sector in the UK crucially depends on the price sensitivity of the energy supply sector and on agent's expectations. Only in our more optimistic scenario do we reach DECC's ambitious challenge of 22 GW offshore wind deployment in 2030 through a constant learning rate alone.